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In the fast-paced world of business, especially for growing SaaS companies targeting mid-size clients, trust is crucial.
But how can you prove your commitment to security and operational excellence?
Meet SOC compliance the gold standard for demonstrating robust internal controls and safeguarding sensitive customer data.
A comprehensive report that showcases your dedication to protecting your customers information.
What Is a SOC Report?
SOC reports can be considered a competitive advantage benefiting an organization in terms of money and time.
Although audits can be tricky, they can offer immense security and trust.
SOC reports help establish the trustworthiness and credibility of a service provider.
Furthermore, SOC reports are useful for:
Why Is a SOC Report Essential?
These organizations need to store their clients or user entities financial data or sensitive data.
So, any company providing services to other companies or users can be befitted from the SOC examination.
What Can You Expect from a SOC Assessment?
Next, an official process will begin with the readiness assessment.
Service organizations prepare themselves for the examination by identifying potential red flags, gaps, deficiencies, and more.
This way, the company can understand the available options to repair these flaws and weaknesses.
Who Can Perform a SOC Audit?
SOC audits are performed by independent Certified Public Accountants (CPAs) or accounting firms.
AICPA establishes professional standards that are meant to regulate SOC auditors work.
In addition to this, certain guidelines regarding execution, planning, and oversight must be followed by organizations.
Every AICPA audit then undergoes peer review.
But, the final report must be checked and disclosed by the CPA.
Lets go through each report separately to understand how they work.
What is SOC 1?
Simply put, it tells you when the organizations services impact a user entitys financial reporting.
What Is a SOC 1 Report?
A SOC 1 report determines service organization control applicable to the user entitys control over the financial reporting.
It is designed to meet the demands of the user entities.
In this, the accountants evaluate the effectiveness of the service organizations internal controls.
There are two types of SOC 1 reports:
What Is the Purpose of SOC 1?
It is applicable to businesses that directly interact with financial data for partners and customers.
Thus, it secures an organizations interaction, storing users financial statements and transmitting them.
How to Maintain SOC 1 Compliance?
It ensures the effectiveness of the operation of SOC 1 rules.
What Is SOC 2?
With specific business practices, every design has its control to comply with multiple trust principles.
What Is a SOC 2 Report?
What Is the Purpose of SOC 2?
Compliance with SOC 2 indicates that the organization controls and maintains a high information security level.
Strict compliance enables organizations to ensure that their critical information is safe.
How to Maintain SOC 2 Compliance?
SOC 2 compliance is a voluntary standard developed by AICPA that specifies how an organization manages its customer information.
SOC compliance is tailored to the needs of every organization.
This allows each organization to adopt the best processes and practices relevant to its operations and objectives.
Below is the checklist of basic SOC 2 compliance:
What Is SOC 3?
What Is a SOC 3 Report?
SOC 3 reports have the same information as SOC 2 but differ in terms of the audience.
A SOC 3 report is intended only for general audiences.
These reports are short and do not precisely include the same data as a SOC 2 report.
They are built suitable for stakeholders and informed audiences.
It helps in keeping pace with international accounting standards.
For example, AWS allows public downloads of the SOC 3 report.
What Is the Purpose of SOC 3?
Thus, outsourcing is a better option but can be risky.
However, organizations must partner only with vendors that demonstrate SOC 3 compliance.
SOC 3 compliance is based on AT-C Section 205 and AT-C Section 105 of SSAE 18.
It includes the basic information of the independent managements description and auditors report.
How to Maintain SOC 3 Compliance?
SOC 3 is the subsequent version of SOC 2, so the auditing procedure is the same.
The service organization freely shares the results after completing the final audit for marketing purposes.
It tells you what to focus on to pass the audit.
If you are offering payroll processing services, you might want to use SOC 1.
If you are processing or hosting customer data, you might need a SOC 2 report.
